MANAGERS claim the Welsh bus network could reduce by a quarter in the next few months, with deprived and rural communities hardest hit.

Councils are already warning they have no money to rescue services which bus operators will halt if the Welsh Government goes ahead with a planned 37% cut in its payments for each passenger carried under the free travel scheme.

Swansea-based First Cymru, one of Wales’ biggest bus operators, said it would have to look at reducing its services by 25% to 30% if the Welsh Government decides to reduce the concessionary reimbursement from 73.59% of the average fare to just 46% from April 1.

The proposed cut follows a 25% drop in grants to bus operators and councils over the last two years, resulting in First Cymru reducing many services in the greater Swansea area.Stagecoach South Wales – the main operator in the deprived Heads of the Valleys region – said the company had applied the future 46% reimbursement rate to its costing model.

“The end result would be that we would be operating 25% less on commercial routes from the end of March than we are currently doing,” said managing director John Gould.

Commercial routes are ones which operate without subsidy, other than a long-standing partial rebate on fuel duty. Stagecoach also operates many services on behalf of councils, for prices which presumed continuation of the reimbursement rate which has always applied since the free travel scheme began in 2002.

“As far as tendered services go, that’s subject to us going to each local authority and negotiating with them,” said Mr Gould.

Legal challenges to the cut are likely, because the law requires the government to reimburse operators by an amount that leaves them no better or worse off than they would be if the scheme did not exist.

However, the Welsh Government did not mention the 37% cut to operators until October, more than six months after the bus industry asked to start negotiations over the scheme’s future. That now leaves too little time for legal challenges to be resolved before the deadline when bus companies must notify the Traffic Commissioner and local authorities of the service cuts they will make by 1 April.

A Welsh Government spokesman said:

“We are currently in negotiation with bus operators and local authorities on the terms for concessionary bus travel reimbursement for 2014-15. No decisions have yet been taken.”

First Cymru’s main services in south Pembrokeshire – linking Haverfordwest to Milford Haven and Tenby – are now in the firing line, because high proportions of the passengers are pensioners on free passes. This means the 37% cut in reimbursement would tip those services into the red.

“Many of the places that have a problem are going to be the more remote communities and more deprived communities,” said Justin Davies, managing director of First Cymru.

“That just seems weird to me. I wouldn’t have thought that’s what the Welsh Government wants.

“We will be handing back tendered services to local authorities, because when we bid we took the revenue risk. The pensioner will still be turning up at the side of the road but they will be worth a lot less in reimbursement. We will say to the local authorities, ‘We can’t do this any more’ but they’re already reducing services anyway.”

The Association of Transport Coordinating Officers Cymru, representing council officers, warned that town halls were unlikely to increase bus spending.